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SummerHaven, US Commodity In Indexing Pact

Cinthia Murphy

SummerHaven Index Management, the Stamford, Conn.-based index provider behind the U.S. Commodity Funds’ broad commodities ETF (NYSEArca:USCI - News), is expanding that partnership by licensing two more of its commodities indexes to the fund provider.U.S. Commodity Funds is looking to expand its roster of commodities funds “beyond single-commodity investment vehicles into diversified commodity pools,” John Hyland, U.S. Commodity Funds chief investment officer, said in a press release.As part of that strategy, Hyland’s company has acquired licenses for SummerHaven’s latest benchmarks:The SummerHaven Dynamic Metals Index (SDMI) and the SummerHaven Dynamic Agriculture Index (SDAI) debuted in September.U.S. Commodity Funds, best known for its $1.7 billion U.S. Oil Fund (NYSEArca:USO - News) and its $2.5 billion U.S. Natural Gas Fund (NYSEArca:UNG - News), first partnered with SummerHaven to launch the U.S. Commodity Index Fund in August, its first ETF not focused exclusively on energy.Popularity Of Commodities The move underscores growing investor demand for commodities-focused funds as they look for diversification at a time when the economy is sluggish.“Following the recent successful launch of USCI, we are excited to license these two new sector indexes providing a dynamic index approach to metals and agriculture futures markets," Hyland said.The SummerHaven Dynamic Metals Index and the SummerHaven Dynamic Agriculture Index pioneered a methodology that relies on underlying markets of specific commodities to determine the weighting of the commodities comprised in the mix.‘Intelligent Exposure’“Investors continue to look for more intelligent ways to gain exposure to commodities,” Prof. K. Geert Rouwenhorst, Yale School of Management, and partner at SummerHaven, said in the press release.”These new sector indexes provide a disciplined approach towards incorporating fundamental signals into sector index construction. Their design strikes a balance between diversified sector exposure and dynamic commodities management.”The U.S. Commodity Index Fund (NYSEArca:USCI - News), based on SummerHaven’s first index, the SummerHaven Dynamic Commodity Index (SDCI), gives investors access, through futures contracts, to the most liquid physical commodities, including energy, precious and industrial metals, and agricultural commodities, including livestock, grains and softs.The fund, which costs 0.95 percent in fees, has gathered about $22 million in assets since it launched in August.

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